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HOW TO PAY OFF MY DEBTS?

– Most people wait way too long before they seek help A lot of people they know they need help, they know they're not gonna be able to pay their debts back but they wait two years before they finally pick up the phone or walk in the door to see us because they're just scared

They don't know what they're walking in to (upbeat music) – Hello My name is Taayla Mark with Engrace Financial Solutions Thank you for joining us We are taking the time to find out what to do when there's nothing more you can do to take charge of your debts

Before moving forward, please make sure to like this video, subscribe and share I am here with Blair Mantin with Sands and Associates in Vancouver They have offices all over British Columbia as well to help people manage their debts Hi Blair – Hello

– Thank you so much for joining us– – My pleasure to be here – And sharing your expertise Okay Well, first question What is a licensed insolvency trustee? – Yeah

It's a big term, right? It's a mouth full Up until a couple years ago, we were called bankruptcy trustees So you might have notice that trustee and bankruptcy, we're basically the people that you can go to see when you need a plan to deal with your debts If you find yourself in over your head, we're the only independent person that's authorized by the government to help you restructure your debt There's two main things we can help with

One is a personal bankruptcy and the other is the consumer proposal And essentially, everything that we do is to the end of helping somebody move forward with no debt – Okay That sounds good – Uh hmm

– The end result is no debt – Yeah – So, how bad does it have to get before someone comes to see you? – Yeah Most people wait way too long before they seek help A lot of people they know they need help, they know they're not gonna be able to pay their debts back but they wait two years before they finally pick up the phone or walk in the door to see us because they're just scared

They don't know what they're walking in to Some typical warning signs, you know, classic ones will be if you're getting a lot of collection calls People calling you at work or at home all hours in the morning or night demanding a payment and you can't make it That's a big warning sign An obvious one would be, if your wages are being garnisheed

And garnishee means that someone's taking something from you so if you owe the government a bunch of money or if you owe a credit card some money and they actually sue you, then they can go on, they can take up to half of your income usually 30% but up to half of your take home pay can be just taken from you as part of the garnishee So those are some pretty typical ones But I think the biggest warning sign that people should pay attention to is if you look at every month, are you getting ahead? You make your minimum payments, does the balance go down next month? Or are you on the plan where you could make that minimum payment for the next 20 or 30 years and you'd never actually get ahead – Right You know some people can get into that type of scenario with as little as, you know, 3-4000 dollars in debts and another people are dealing with hundreds of thousands dollars in debts

– Yeah – So, is there a certain limit, I guess, in getting in front of someone like yourself to deal with their debts? – Yeah In terms of a minimum limit, the minimum is only a thousand dollars but we don't do any bankruptcies or proposals for only a thousand dollars That's in the law That's been there since the great depression

That's when a thousand dollars was a lot of debt You know, the average person when they walk in the door it's probably between 20 to 40 thousand dollars of debt but we do see people, you know, it could be millions of dollars of debt There was a bad ICBC accident that wasn't covered, if there was some investment loses, there can be a bunch of reasons why someone would owe a ton of money But it's really individually Someone who makes a lot of money and owes $50000 that might not seem insurmountable to them

Someone who's really struggling to get by making minimum wage and owes $10000 that might feel like the biggest problem in the world to them So, each person it's all can you handle it? And can you really see a tomorrow where you know, we're not talking 10 years from now but say a year from now, are you gonna be less in debt doing what you're doing? Two years from now will you be less in debt? If the answer is no, then you need to talk to a professional and start to move in the right direction – So, earlier you mentioned consumer proposal and bankruptcy – Right – What's the difference between that or between the two? – Yes

They're completely different legal options They're both only available through a licensed insolvency trustee They both give you the protection from your creditors So again, if your wages are being taken, are you getting harassed with collections calls or if you're being taken to court, all that has to stop under both a bankruptcy and a proposal Where they differ is that in a bankruptcy, you're essentially throwing up your hands and saying, you know what I've got so much debt, hopelessly in debt, I can't even afford to pay back any part of this debt so I'm gonna file for bankruptcy and will get relief from my creditors

And in a bankruptcy you pay back based on your income If somebody is low income, bankruptcy finishes in nine months and they make a minimal payment to the trustee each month that basically just covers the cost of their preceding, their creditors basically receive no dividend on their debt and all that gets written off Consumer proposal is different in that it's working at a deal with the creditors where they agree to stop all the interest They agree to reduce the debt down to what the person can actually afford and usually that's in the range of 20% of the debt, 30% of the debt, something like that So again, all the interest stops

There's no additional charges and the person just repays what they can afford, which is usually just a fraction of the total debt And you might say, well why would creditors every agree to a deal like that? And the why is because when a person files for bankruptcy and it's their right to do so, creditors can't reject the bankruptcy with some people think you need permission, you don't But if someone files for bankruptcy, we say to their creditors, you might get zero back or you might get five or 10 cents on a dollar, so we'll offer a proposal for maybe 20% of the debt or 25% or something like that that's a win-win The win to the creditors is they don't have to deal with the bankruptcy and write off all the debt The win to the individual is they are get to pay back what they can afford

There's no further interest They didn't file for bankruptcy And literally, they pay back usually a third, a quarter, even just 20 cents in a dollar of the debt and they deal with the problem without a bankruptcy – Just stop fighting – Just stop fighting

Just see the benefit for everybody here If we file a proposal and it's at 20 cents in a dollar and the creditors don't want it, we'll go back and forth counter offers until we reach a deal 99% of the cases, not exaggerating, 99% of the cases, where we file a consumer proposal, we actually reach a good deal by the end – Awesome What about the consequences of how it affects your credits? – Someone files for bankruptcy

The bankruptcy is off and over in nine months or in other cases, a year and nine months, but nothing like the six, seven years most people think Once the bankruptcy is over, that's when you can start rebuilding credit But you will have an impact You'll have an R9 rating on your credit report for six years after the bankruptcy is over So, if it's nine months of bankruptcy plus six years of credit impact, you're at close to seven years total, it doesn't mean you're untouchable for those seven years

Most people within two to three years after a bankruptcy, they have better credit from when they started They're able to rebuild their credit They start with the secured credit card and people can even qualify for mortgages a couple years after bankruptcy Where if they hadn't taken that step to clear off their debt, there's no way they could have ever saved the down payment been mortgage worthy So sometimes, it's totally counterintuitive, bankruptcy can be a very positive step to actually being financially stable later on

You gotta get rid of all those debt around your neck Consumer proposal is less severe on your credit So, where bankruptcy is an R9, R1 is perfect credit, R9 is bankruptcy, a proposal is R7 So, R7 is a negotiate of payment arrangement with your creditors Its' the same as if you went through a credit counseling firm and just negotiate an interest freeze but you pay back everything that you owed, that's still an R7

So, a proposal, even though you're paying back 20, 30, 40% of the debt, whatever it is, it hurts you the same as if you just froze the interest Any time you renegotiate your debts, it goes to an R7 A proposal that stays that way for three years after you finish it, so if you finish the proposal in a couple years plus three, you could be at five years of impact Sometimes proposals take longer so it could take seven, eight years of total impact, the proposal took you four years plus three but most of the time people pay proposals off more quickly than the targeted time (upbeat music) – You've mentioned the counseling, is it credit or– – Yeah

– Credit counselor – Yeah – 'cause I was doing my research and that came up and I was like, okay well, what is the difference? And– – Yeah – Why would one want to go there versus to someone like yourself, a licensed insolvency trustee? – If you just need someone to give you some budgeting coaching, you don't need to reduce any of the interest or the cost of your debts, credit counselor can give you some really good soft skills to help you move forward And in every other case, if you need to reduce your debt, if you work with a credit counselor, they're not able to do a consumer proposal, the only thing they're able to do is what's called the debt management plan, which is payment in full of all of you debts but with a break on the interest

Okay? – That they would negotiate on their behalf – They'll negotiate a break on the interest, right? Whereas, with the consumer proposal, there's automatically no interest and you pay back the portion you can afford So, it might be that credit counseling can cost you three times more, four times more, depending on what structure the proposal might be Also, with the proposal, when I make a deal with your creditors, I don't need everybody to agree because I've got the law behind me If I've got, if you've got say $20000 of debt, as soon as I get over $10000 of your creditors that want this proposal, it doesn't matter what the other people want, even if it's CRE, even if it's the government, I can force them to abide by the terms of the proposal if only 50% of your other debts have accepted it

Credit counselors have none of that legal authority They can't deal with government debt at all They need individual creditors all to agree to a plan and they can opt out at any time So, it's very little protection compared to a consumer proposal So again, when someone starts to do their research, they start to figure out, you know what, a trustee is your best ally in this situation

(upbeat music) – Talking about fees– – Uh hmm – How is fee structured? – Yeah and I love having this discussion because it's really transparent There's only a thousand licensed insolvency trustees in Canada, everything we do is heavily regulated by the Federal government, by the office of the superintendent to bankruptcy Every trustee in Canada will offer a free initial consultation So, it's a free meeting

You come in We usually spend for about an hour We talk about the situation The objective is not to make you feel judged at all or feel bad about the past and what's happened It's to give you a sense of what's to optimist move in the future, what can you achieve, what are these options that government created but has done a really poor job of telling you about

That's what a trustee is going to do, he's gonna explain to you all you options for moving ahead Once you start your work with the trustee, typically with my clients, I'd meet them at least three or four or maybe five times before we do a formal filing And it's only at that time that we do a filing do they pay anything So, they might have spent four or five hours with me, you got a lot of good professional advice we're working to structure of filing, it's if they decide to do consumer proposal, let's say the proposal is for $200 a month When we sign a documents, they make the first payment of 200

My fee is included in every payment that they make, whether it's a bankruptcy or a proposal Government says what they gotta pay bank in the bankruptcy and my fee is included in that In a proposal, whatever deal we work out, the trustee gets a portion of that There's never a separate invoice that I give to anybody – Okay

So, based on what they can afford then it is what it is – Yeah One way to consider it, if you're doing a proposal, is that it's actually the creditors are paying the cost of the trustee because we figured out, you can afford to pay back, let's say 6000 on 20000, that's what you can afford, trustees gotta get paid from something, well trustee gets paid out of that 6000 and the creditors will get the balance So, essentially comes out of their pocket and not the individuals – Having a bankruptcy, going through a bankruptcy, it's very intimidating for anybody but I'm sure there's always the negative and positive things that comes out of it and I know you touch upon a feel of those already

– Uh hmm – But, you know, just to summarize it for us – Yeah – What are some negative things that will affect their lives because of this bankruptcy and what are some positive things that will really help them to go through a bankruptcy – Yeah

Let's start on the negative because the negative is really short Most people have this conception if you file for bankruptcy, you can never move, you can never travel, you can never leave the country, all those things are fine There's no impact, passports, citizenship, nothing like that if you file for bankruptcy The negative impact really is on your credit So, people that loaned you money are gonna see for a period of time that unfortunately, you weren't able to pay off all your debts in full and you went into a bankruptcy

That's fair and it's reasonable but it's gonna stop after six years, after you're discharged and they're gonna stop seeing that So in terms of negative impacts, you can't be fired from your job You can't be disciplined just because you filed for bankruptcy There's no newspaper notification in about 999% of the case

So, probably, nobody else is gonna know about the situation The only other negative I can think about is if you are director of a corporation, which is a very small subset of people, you can't file for bankruptcy and be a director of a corporation – Okay – So, that's about it from the negatives On the positive side, my god, imagine a life without debt, right? Imagine a life where you've been carrying around, sometimes for 10 to 15 years, just this debt that doesn't seem to go down

Every month you pay your bills, you make the minimum payments and you see 80 or 90% of that just goes back to interest and the next month you got to the same thing again I have people come to me, you know, literally in tears, beaten down that something bad has happened in their life, which is often no fault of their own Maybe they lost their job, they got divorced or a family member got sick and they had to deal with that and then they have to deal with the financial of that that just doesn't go away So, the positivity is just stopping the bleeding Stopping the interest

Stopping the debt from increasing and giving you a hope, a plan, a road map that you can be debt free Again, the maximum term for a proposal is five years That's the longest term you'd ever have to pay if you did a consumer proposal And bankruptcy is typically shorter than that So, we're not talking for the rest of your life, you gotta carry around these problems

You can deal with them very quickly, efficiently and privately if you see a licensed insolvency trustee – Okay And the process itself, it could be relatively stress free? Can I say that? – Yeah Absolutely That's what we try to achieve because when we step in the middle, like a referee, suddenly you don't have to deal with all these people yelling and screaming and changing all the rules for you all the time

We're incredibly clear when you sign up with us, whether it's a bankruptcy or proposal Here's how things are gonna go, call me if you have problems Someone bothers you? They gotta bother me instead I'm on the case here So, definitely, the raising or the, sorry, the lowering of a very stressed level, that's something that I really take pride in

The ability to literally to get people their lives back – Okay Cool Thank you very much, Blair – My pleasure

– So, actually, Blair has his own radio show – Uh hmm – Can you share with us? – Yeah It's on CKNW AM980 It's on Sundays at 5pm

– Awesome That information, as well as the website for Sands and Associate, will be on the description for this video So, for all of you that are thinking about it now that you got a little bit more information, it might be worth it to have that complimentary initial consultation and see if it's something that's right for you Thank you so much for joining us today We are super happy to have Blair to share with us all this amazing information

I learned a lot I don't know about you And, you know what, if you have comments you have extra questions, feel free to leave it on the comments section below And as always, please subscribe, share and like this video Engrace Financial Solutions, financial success made simple

Please before we get started, like this video, share it and subscribe when you have a chance I don't know why I said that because that doesn't sound right Let's just– – [Woman] No, it's right now It's not that they have a chance – Not right now

Not a chance Exactly Right now Oh my gosh Okay

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